By Babajide Okeowo
The equities market hit a historic peak yesterday buoyed by three days of gains. The market capitalisation grew from N19.236 trillion to N20.281 trillion or 5.4 percent increase, while the Nigerian Stock Exchange NSE All-Share Index appreciated from 36,804.75 to 38,803.74.
This follows a gain of N1.334 trillion recorded last week.
This is the highest the market would record since 2008 when it peaked at N12.3 trillion before the meltdown. That meltdown brought the market value to about N6 trillion before it started recovery in later years.
According to analysts at Greenwich Trust Research, “the market will likely remain upbeat buoyed by end-of-year portfolio re-balancing by fund managers, or even the “Santa-Rally”. We, however, do not rule out intermittent profit-taking that could slow down the uptrend in the market.”
Similarly, analysts at Cordros Research said in the short term, they still see scope for expansion in valuation multiples as the hunt for alpha-yielding opportunities, in the face of increasingly negative real returns in the fixed income market, remains positive for stocks.
Analysts at InvestData Consulting said there have been positive sentiments for value, growth, and highly capitalised stocks with an attractive valuation, as investors reposition for year-end seasonal trends and the much expected economic recovery in 2021.
“The bull run shows that smart money is still in the market. The ongoing Santa Claus rally is attributed to window dressing for year-end among institutional investors, even as bonuses are entering the market ahead of the New Year, as some investors are taking advantage of the tax code by selling positions they have taken losses at the end of December to buy-back in January,” they said.